Oil prices change quickly in response to supply/demand balances(or perceived future balances).Demand does not respond quickly to price changes.ralfy wrote:Oil price soared, but demand did not plummet. Oil price crashed, but demand did not soar.
Oil Price: Not Just About Supply, Consider Demand Elasticity TooThe market is oversupplied, by a significant amount, and no amount of posturing will change that. However, basic economics may. Overlooked by many is the fact that OPEC’s problem is one that automatically diminishes over time even if OPEC does nothing. This is because the demand for oil is short-term inelastic, but long-term elastic. If demand is inelastic, then a price cut doesn’t change the quantity sold very much. Oil demand is, at least in the short-run, price inelastic. If gasoline prices rise $1 per gallon next week, you will still drive almost as much as before.
Cog wrote:I wonder if professional doomers, the ones who get paid to predict doom, ever sit back after their doomer predictions come to naught, think about what a waste their life has been.
Both are true. Oil is short term inelastic on both the production and demand sides:pstarr wrote:In the oil business, the opposite is true. Production does not simply ramp up. New production can take a decade for lease purchase, environmental impact, road and infrastructure development, collection and processing equipment, test wells, development wells, productions wells.
Demand and Supply Applied: Oil PricesBoth the demand and supply of oil are relatively inelastic in the short run: changes in price have little impact on either the quantity demanded or the quantity supplied. When oil prices rise we spend considerable time and energy complaining but, at least in the short run, spend almost no effort in trying to adjust our habits to consume less. Similarly changes in price do little to spur new supplies in the short run.
That is old data. New data shows VMT and VMT per capita rising again:pstarr wrote:No. The market is not over-supplied, it it under-demanded. We see a demand dearth around the world and even in the United States.
VMT Hits Nominal High, Approaches All-Time Per Capita MarkThe Federal Highway Administration announced this week that in calendar year 2016, the total number of miles traveled by vehicles on all U.S. roads reached another all-time high of 3.218 trillion, above 2015’s 3.130 trillion, which itself was the highest since 2007’s 3.031 trillion. In 2016, VMT was 10,065 miles per capita – the highest that it has been since 2007’s 10,049 m.p.c. This still is not quite up to the all-time high of 10,117 m.p.c. in 2004. Importantly, note that the rate of increase in VMT per capita over the last three years (an average of 1.7 percent per year) exceeds the average rate of increase over the 13-year 1992-2004 period (an average of 1.3 percent per year). So predictions of a perpetual decline in total VMT per capita appear unfounded.
onlooker wrote:How is this for recent: https://srsroccoreport.com/oil-price-co ... d-its-day/Oil Price Collapse Is ‘Permanent’; Analyst Says Fossil Fuel Has Had Its Day
The highly regarded Oxford University economics professor is a long-time industry observer.
It seems Etp is going mainstream
onlooker wrote:How is this for recent: https://srsroccoreport.com/oil-price-co ... d-its-day/Oil Price Collapse Is ‘Permanent’; Analyst Says Fossil Fuel Has Had Its Day
The highly regarded Oxford University economics professor is a long-time industry observer.
It seems Etp is going mainstream
kublikhan wrote:Oil prices change quickly in response to supply/demand balances(or perceived future balances).Demand does not respond quickly to price changes.ralfy wrote:Oil price soared, but demand did not plummet. Oil price crashed, but demand did not soar.
Price elasticity is a basic concept of econ 101:ralfy wrote:So much for Econ 101?kublikhan wrote:Oil prices change quickly in response to supply/demand balances(or perceived future balances).Demand does not respond quickly to price changes.
Economics 101Price elasticity is a concept known for measuring the responsiveness of demand and supply quantities to the changes in price.
Good point. And global oil production/consumption is still rising:ralfy wrote:Why VMT and car sales in the U.S.?
Why not look at global oil production and consumption?
kublikhan wrote:global oil production/consumption is still rising
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